NNPC About To Sack 1.1k Staff

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu,
yesterday, stated that he had received the Presidency's approval to
commence the final phase of the restructuring of the Nigerian National
Petroleum Corporation (NNPC), which would see the Corporation
unbundled into four components, while about 1,100 of NNPC
headquarters' staff would be disengaged.
He also stated that the country no longer has the resources to fund
its oil and gas industry, and it is therefore, considering and
developing new models of financing for the industry in the days ahead.
Kachikwu, who spoke at a town-hall meeting in Abuja, yesterday,
disclosed that in January 2016, the final decision on the fate of the
country's refineries would likely be made. He also stated that
arrangements have been concluded to adopt a price modulation mechanism
that would see the corporation setting a price ceiling of between N87
and N97 per litre for Premium Motor Spirit, PMS, also known as petrol.
Kachikwu, who doubles as the Group Managing Director of NNPC said,
"Financing is going to be a key component of our goal, because new
models of financing would have to emerge. The country does not have
the sort of resources to continue to fund the oil industry. As we go
upstream, we are going to begin to see a lot of innovative financing
mechanism to provide funding for the oil industry."
"My dream, if I achieve it, is that by the end of 2016, we would
completely exit cash calls and be able to find our funds one way to
help support our business and get a lot more autonomy in terms of
running the industry and report, basically, profit to the Federal
Government."
On the unbundling process, Kachikwu said the NNPC would be broken into
four key components, namely: the upstream company, downstream company,
the midstream company, which is gas and power marketing, and the
refining group holding company.

According to him, one of the major restructuring efforts would be in
making the headquarters operations cost effective, hence, about more
than half of its 2,200 core headquarters staff would be whittled down,
with a lot of the affected staff assigned to the subsidiaries to help
make the units more efficient and profitable.
Kachikwu said, come January 2016, strategic decisions would be made in
terms of what areas of the country's refineries would be closed to
allow for full re-kitting before reopening them for operations, while
it would also be considering the best operating model for the
refineries.
"Ultimately, technical support, technical services, and technical
joint venturing would also be models we would be looking at and
reviewing in terms of the refineries. The whole idea is find the
funds, find the right skills that you need, support the skills that
you have and try to give out, real-time, above 90 per cent consistent
performance in refining."
On the issue of fuel subsidy removal and subsequent hike in the price
of PMS (Petrol), Kachikwu stated that, "One thing we are very
committed to next year, is to reduce the level of Federal Government
subsidy, if any, to the industry, so that the industry can grow on its
own strength. We can do that without the mechanism of saying subsidy
is being removed or whatever, but have a benchmark approach to setting
prices. We are going to see a lot more quarterly type analysis of what
prices would go for the downstream industry, relative to the price of
crude oil," he stated.
"The report that fuel is going to sell for 97 was not a correct. I did
not say refined products will sell for N97. I said that between a band
of N87 and N97 per litre, we are going to be looking at prices. Today,
the prices are largely close to N87, so there might be no need to
change prices," he added.

The minister also disclosed that the Federal Government was
considering allocating a number of marginal oil fields to the Nigerian
Petroleum Development Company (NPDC), if it performs creditably, so as
to help it increase its crude oil reserves base.
He also disclosed that a much more focused audit would be conducted on
the operations and activities of the NPDC, to ascertain its asset base
and also determine whether it is increasing or depleting its reserves.
Speaking on NNPC's financials, he said: "Most of the management
accounts up to 2014 are fairly finished; we are now looking at
external audits. Audits were last done in 2010. We have brought the
management accounts up to current; the external audits are ongoing;
the 2012 to 2014 audits we expect would be done by March next year,
which would bring us likely current."
According to Kachikwu, the focus of the Federal Government is to get
the NNPC back to profitability to ensure the sustenance of the
company, while it is also targeting an increase of Nigeria crude oil
production to 2.4 million per day in 2016.